SACHINDRA NATH ROY Vs. MAHARAJ BAHADUR SINGH

JUDGEMENT

(1.) The financial dealings between the several parties concerned out of which the appeals in this case have arisen are somewhat complicated. It is, however, necessary to examine them in order to understand clearly the points calling for decision. On March 8, 1886, May 12, 1887, a May, 12, 1892, the predecessors in title of the appellants in this litigation, styled the Roys, borrowed from one Dhanpat Singh three sums of Rs. 3,00,000, Rs. 20,000 and Rs. 15,000 respectively, and secured the repayment thereof with interest at the rates stipulated by three mortgages bearing the above respective dates of certain immovable property belonging to them, the Roys. These mortgages were presumably, in the ordinary form, conveyances of the absolute interest in the property pledged with the usual provision for redemption, coupled with covenants by the mortgagors to pay the debt due under them. The Transfer of Property Act permits in Calcutta the creation of equitable mortgages by deposit of deeds. Accordingly Dhanpat Singh on June 3, 1893,created at Calcutta an equitable mortgage of the property of the Roys, comprised in these mortgage deeds, by depositing these latter documents with a firm trading at Calcutta as Shewaram Khoshal Chand hereinafter styled "the firm," to secure the repayment of Rs. 70,000 lent by them to him, with interest till paid. It is not clear whether at this particular date the Roys had notice of this transaction. Early in the year 1894, Dhanpat Singh instituted two ordinary mortgagees suits against the Roys to recover the amount secured by the three first-mentioned mortgages. The equitable mortgagees, the firm, were not made parties to these suits or either of them. The Roys contested these suits and, ultimately, a settlement was come to whereby Dhanpat Singh accepted a sum of Rs. 1,20,000 in full satisfaction and discharge of the amount due to him for principal and interest on the three legal mortgages. The Boys had not this sum of Rs. 1,20,000 available.

(2.) They were in consequence obliged to raise the money to pay Dhanpat Singh the arranged sum of Rs. 1,20,000 They accordingly borrowed from the Eastern Mortgage Agency Company, hereinafter styled "the Company," a sum of Rs. 2,00,000, and secured the repayment of it with interest by executing to this company a mortgage dated April 23, 1894, of all the property comprised in the three first-mentioned mortgages. By reason, apparently, of the existence of the equitable mortgage created by the deposit of the mortgage deeds, an expedient was adopted. A deed of even date with the mortgage-namely, April 23, 1894-was executed by Dhanpat Singh, by which after he, acknowledging the receipt of the sum stipulated for, released the lands and premises mentioned in the three mortgages from all claims, etc., under these instruments and protected the Roys by a covenant in the words following from all claims which might be made against them in respect of any of the matters therein mentioned. The covenant ran thus : 2. The mortgagee doth hereby for himself, his heirs, executors, administrators, representatives and assigns, covenant with the mortgagors, their heirs, executors, administrators, representatives and assigns in manner following: (a) That the mortgagee, his heirs, executors, administrators, representatives and assigns shall at all times hereafter keep the mortgagors, their heirs, executors, .administrators, representatives and assigns, their and each of their estate and effects harmless and indemnified against all losses, damages, actions, claims, suits, demands and accounts in respect of the said three several hereinbefore recited deeds of mortgage, or any money owing or due thereunder or otherwise howsoever or for any act done by him, the said mortgagee, with respect to the said deeds, (b) That the mortgagee shall forthwith cause the said two suits, respectively numbered 75 and 301 of 1894, now pending in the Court of Subordinate Judge in the district of Murshidabad to be forthwith compromised on these terms and petition to that effect filed accordingly.

(3.) The deed containing this covenant was duly registered on the day it bears date. The plaintiff Dhanpat Singh in each of the two suits instituted by him lodged, in pursuance of the terms of settlement, a petition praying that these suits might be disposed of according to the terms of the settlement which had been arrived at. The Court granted the prayer of this petition, and made in the first suit a decree dated May 5, 1894, and in the second suit a decree dated May 7, 1894, whereby it was in each suit respectively decreed that the suit having been amicably settled it should be disposed of, that the claim of the plaintiff should be taken to have been satisfied, and that each party should bear his own costs.